Skip to main content

Palantir Technologies Inc Cl A(PLTR-N)

Today's Change
Real-Time Last Update Last Sale Cboe BZX Real-Time

Can AI Integration Boost Kinder Morgan's Storied Reliability and High-Yield Dividends?

Motley Fool - Wed Aug 30, 8:43AM CDT

Kinder Morgan(NYSE: KMI) is a stalwart leader in the realm of energy infrastructure, celebrated for operational and financial reliability as well as delivery of high-yield dividends. Investors looking into the stock should consider how Kinder Morgan leverages AI in its operations. Let's examine how Kinder Morgan integrates technology from Palantir Technologies (NYSE: PLTR) to adopt a data-driven approach that continues to drive success and support future growth and dividends.

Kinder Morgan demonstrates the power of data integration

Kinder Morgan stands as an international leader in energy transportation and storage. By constantly developing and improving the underlying infrastructure it uses for this purpose, the company positions itself for greater profits over time. Natural gas pipelines provide Kinder Morgan's largest chunk of revenue, providing $1.9 billion in revenues, or over half, of the company's $3.5 billion total in the most recent quarter.

Big-data firm Palantir develops software that gathers information from many sources and helps distill that information into actionable insights and operations. Subscription and exclusive access contracts provide income for Palantir, and its integration with big enterprises helps drive the tech company's profitability.

Palantir's data integration software platform, Foundry, is the foundation for its current strategic partnership with Kinder Morgan. The adoption of Foundry within Kinder Morgan's gas storage operations signifies a monumental shift toward data-driven decision-making. The system uses real-time data and programmatic responses to improve operations in the Texas energy market. Kinder Morgan offered many years of experience with predicting flows and needs, and Foundry's integration of disparate data sources made it possible for Kinder Morgan to best employ that experience.

The data pulled includes energy use and flow and combines it with weather conditions and other sensors to feed information to the jointly produced Decision Support Tool. The DST can then provide accurate forecasts of energy needs and potential challenges up to seven days in advance.

According to the initial information provided by Palantir, Foundry integration begins with compiling sensor data from literally millions of points and provides Kinder Morgan with real-time analysis, empowering overall decision-making needed to address any supply or flow issues and anticipate need. Teams can more quickly and effectively respond to challenges with supply and gas-grid integrity, keeping natural gas flowing properly and smoothly to customers.

The same tools also allow precise determination and accurate prediction of customer needs, helping direct flows to areas with peak demand and optimizing storage. This access further amplifies its reliability in the field as well as the market.

Foundry's impact resonates throughout Kinder Morgan's gas storage operations. The transition has been profound. Activities that previously demanded two to three hours of data compilation now deliver actionable insights within two to three minutes, according to a Palantir case study on its partnership with Kinder Morgan. This synchronized view enables exact measurements with precise timestamps across the storage and delivery network, instead of measuring the quality and nature of the flow at both ends.

Using these enhanced measurements and predictive analytics, Kinder Morgan can schedule maintenance during slower periods and tweak efficiency at specific locations for better throughput. This acceleration in data processing and production of fast, actionable analytics aligns with Kinder Morgan's journey toward operational precision, amplifying operational reliability as an inherent outcome.

The company reaffirms its commitment to shareholder value

The recent approval of a cash dividend of $0.2825 per share for the second quarter, a 2% increase over the same period in 2022, underscores Kinder Morgan's commitment to shareholder value. This move, backed by the company's robust financial performance, reflects its dedication to delivering attractive dividends to investors seeking passive income.

In the second quarter, net income attributable to Kinder Morgan reached $586 million, while distributable cash flow (DCF) stood at $1.07 billion. These figures highlight the company's sustained financial health. Distributable cash flow enables the company to continue investment in its operations and other revenue-generating enterprises that may take some time to materialize, while a strong net income ensures funding for current operations. The quarterly report also saw adjusted EBITDA and DCF exceeding the 2023 plan, reaffirming Kinder Morgan's strategic prowess.

AI integration elevates reliability, and operational savings from greater efficiency and reduces in operations cost for maintenance could well fuel infrastructure expansion that help growth and secure dividends, as evidenced by Kinder Morgan's ongoing projects. The Markham Storage Expansion project seeks to enhance gas storage capacity along the Texas Gulf Coast.

When completed, the expansion will offer over 6 billion additional cubic feet of storage to the Texas energy network. Building for the future in this way expands capacity before it becomes critically needed, providing ample room for future growth in the region.

The convergence of legacy and modern innovation shines through

The strategic deployment of Palantir Foundry within Kinder Morgan's operations offers more than an integration of technology; it demonstrates a fusion of Kinder Morgan's legacy of operational excellence with modern AI's transformative power. Foundry continues augmenting efficiency and reliability while also yielding quantifiable results for ongoing operations. This synergy positions Kinder Morgan as a major leader employing AI in energy infrastructure.

The Kinder Morgan-Palantir partnership showcases the potential of a new era. It creates an updated scenario where infrastructure companies can harness AI's potential to augment reliability and reduce costs. This helps Kinder Morgan deliver solid dividends and create growth through measured expansion. Thus, Foundry becomes a conduit for Kinder Morgan's evolution into a next-generation, AI-powered energy infrastructure leader. Savvy investors can likely see the path to sustained profitability that comes from reliability and expansion in a company that already delivers high-yield dividends.

10 stocks we like better than Kinder Morgan
When our analyst team has a stock tip, it can pay to listen. After all, the newsletter they have run for over a decade, Motley Fool Stock Advisor, has tripled the market.*

They just revealed what they believe are the ten best stocks for investors to buy right now... and Kinder Morgan wasn't one of them! That's right -- they think these 10 stocks are even better buys.

See the 10 stocks

*Stock Advisor returns as of August 21, 2023

Nicholas Robbins has no position in any of the stocks mentioned. The Motley Fool has positions in and recommends Kinder Morgan and Palantir Technologies. The Motley Fool has a disclosure policy.

Paid Post: Content produced by Motley Fool. The Globe and Mail was not involved, and material was not reviewed prior to publication.